|Bid||0.00 x 610000|
|Ask||0.00 x 268000|
|Day's Range||476.05 - 488.55|
|52 Week Range||390.75 - 489.90|
|Beta (5Y Monthly)||1.14|
|PE Ratio (TTM)||7.69|
|Earnings Date||Feb 03, 2020 - Feb 07, 2020|
|Forward Dividend & Yield||26.67 (5.50%)|
|Ex-Dividend Date||Oct 10, 2019|
|1y Target Est||7.72|
Morgan Stanley has slapped an “underweight” rating on Saudi Aramco, as the bulk of the Wall Street banks that advised on its initial public offering stopped short of recommending investors load up on the ...
Oil and gas giant ExxonMobil Corp. (NYSE: XOM) recently achieved what many in the export compliance profession thought would be impossible. It won a federal court case against the Treasury Department's Office of Foreign Assets Control (OFAC) to reverse a $2 million penalty for noncompliance. In July 2017, OFAC issued the penalty against ExxonMobil for alleged "reckless disregard" of the Ukraine Related Sanctions Regulations when the company in May 2014 entered contracts with Russian oil company Rosneft OAO.
(Bloomberg Opinion) -- In the space of just a few momentous weeks, one of Russian President Vladimir Putin’s most ambitious projects — a Russian natural gas export system to match the new geopolitical reality rather than the Cold War-era one — has taken its final shape. It will probably last, without major change, until the end of Russia’s run as a top energy exporter. The finishing touches to the project, begun in 2001 with the construction of the Blue Stream pipeline to Turkey, include the launch of the Power of Siberia pipeline to China on Dec. 2, last week’s U.S. sanctions on the Nord Stream 2 pipeline to Germany, a new gas transit deal with Ukraine and the commissioning of the TurkStream pipeline, planned for January.External pressure and market circumstances have helped shape the new Russian gas export system so that it can’t really be used as a sinister tool of Putin’s rogue foreign policy. Meanwhile, it’s structured in a such a way that post-Putin Russia will still be able to maintain its energy market share and use it as a basis for useful trade partnerships. That makes it a positive part of Putin’s legacy, if not entirely thanks to Putin.Problems Inherited and Self-MadeRussia inherited contracts from the Soviet Union to supply natural gas to Europe, one of the biggest sources of hard currency for Russia’s reeling post-Communist economy. But the Soviet pipelines were laid across Ukraine and Belarus, which were part of the empire. But they became independent nations that demanded transit fees and low-priced energy supplies in exchange for maintaining Russia’s energy supplies to Europe, or rather, to its ex-Communist part, where Russia and everything that came from it were newly unpopular.At the same time, gas suppliers in Central Asia and Azerbaijan presented a competitive threat: It was relatively easy for them to pipe gas to Turkey, which could deliver it further to Europe.In the 2000s, when Putin and his advisers nurtured the notion of Russia as an “energy superpower,” it became clear to Kremlin strategists that they needed more flexibility to increase supplies and get more economic leverage over neighbors in Europe and Asia. Blue Stream, laid across the bottom of the Black Sea to the Turkish port of Samsun and opened in 2003, was the opening move of the Putin gas game.But Blue Stream’s capacity of 16 billion cubic meters of natural gas per year was dwarfed by the roughly 180 billion cubic meters the Soviet-built pipelines could export to Europe via Ukraine and Belarus. It helped Russia compete in Turkey, but didn’t solve the bigger problem of Russia’s dependence on Ukraine and Belarus. The share of European natural gas imports that came from Russia kept falling.In 2011, Russia obtained full control over the Belarussian gas transit system in exchange for discounted gas supplies. But Ukraine remained firmly in control of its pipelines, which accounted for the lion’s share of Russia’s export capacity.Putin wanted more direct access to southern and western Europe. He wanted to be able to bypass Ukraine, for both economic and political reasons. The Ukrainian pipeline system, run by National JSC Naftogaz Ukraine, was falling into disrepair, and Gazprom, the Russian export monopoly for pipeline gas, feared it might have to invest in fixing it without having much influence over its operation. At the same time, Putin wanted leverage over the Ukrainian government to keep it in Moscow’s orbit. Twice in the 2000s, Russia cut off gas supplies to Ukraine to try to bring it to heel, but without alternative export routes, such tactics were unsustainable.In 2012, Russia made another major move with the opening of Nord Stream, stretching across the bottom of the Baltic Sea to northern Germany. With a capacity of 55 billion cubic meters a year, it boosted Russia’s share of European imports. At the same time, Russia was planning a major pipeline to southern Europe, South Stream, across the Black Sea to Bulgaria. From there it would branch out to carry gas to Greece, Italy, Serbia and on to central Europe. The 2014 Crimea annexation made it imperative for Putin to redraw the gas export map. Now, Ukraine wasn’t just an inconvenient partner, it was an adversary, and bypassing it became a geopolitical necessity for Putin. Europe, too, was more worried than ever about increasing gas exports from Russia, which could use it to expand its political influence. The European Union scuppered South Stream in late 2014 by putting pressure on Bulgaria. Plans to expand Nord Stream by laying two parallel strings of pipe, known as Nord Stream 2, also became politically toxic, especially given U.S. resistance to that project: In Washington, fears of increased Russian leverage over Germany were compounded by the desire to supply more U.S. liquefied natural gas to Europe.Art of the PossibleThe way Russia altered its gas export plans in the last five years reflects a major shift in its geopolitical thinking. Putin’s anti-Western partnerships with key authoritarian regimes — those of Turkish President Recep Tayyip Erdogan and Chinese President Xi Jinping — had to be backed up with gas pipelines. At the same time, Putin wanted to maintain a lifeline to Germany, with its history of regime-agnostic Ostpolitik; Putin, a German speaker and a former Soviet intelligence agent in East Germany, sees Russia’s relationship with Europe as one with Germany first, even if Chancellor Angela Merkel is one of the continent’s least Putin-friendly leaders.So South Stream mutated into TurkStream, a pipeline with a planned capacity of 31.5 billion cubic meters running to the western part of Turkey, from where gas will flow to the Balkans. It was first filled with gas in late November, and Putin and Erdogan plan to inaugurate it on Jan. 8.The pipeline to China, Power of Siberia, which should be delivering 38 billion cubic meters of gas a year by 2024, opened early this month, with Putin and Xi watching via video link. It runs from Gazprom’s deposits in Eastern Siberia, too far from Europe for deliveries to make economic sense.At the same time, Russia has made a point of competing with the U.S. and Middle Eastern suppliers on the new and fast-expanding European market for liquefied natural gas. Novatek PJSC, a private company in which state-owned Gazprom is a minority shareholder along with France’s Total SA, started exporting from its enormous LNG facility on the Yamal Peninsula in 2018, and this year it approved a $21 billion investment in a second LNG plant. (Gazprom and Rosneft, another state company, have their own LNG capacity, but mostly for export to Asian markets). In the third quarter of 2019, Russia was the EU’s second biggest LNG supplier after Qatar, with 15% of imports; the U.S. was fourth, with 12% — although data from the U.S. Energy Information Administration show that the U.S. has overtaken Russia more recently.All these developments make it almost inevitable that Russian natural gas exports will keep increasing as spare production capacity keeps shrinking. Though vessels laying pipe for Nord Stream 2 and their owners have been sanctioned by the U.S., and Swiss contractor Allseas has suspended work on the project to avoid falling afoul of the U.S. government, that pipeline will be completed, too. Gazprom and one of its Russian contractors have pipe-laying vessels of their own. Though they’ll move slower than the bigger one provided by Allseas, Peter Beyer, the German government’s coordinator for trans-Atlantic issues, said in a radio interview on Monday that the government expected Nord Stream 2 to be operational in the second half of 2020. The delay has forced Russia to do a better deal with Ukraine than it would have been able to negotiate had there been no Nord Stream 2 sanctions. To replace the transit deal that runs out at the end of this year, Russia was trying to sign a mere one-year extension. Ukraine and the EU, which mediated the talks, were fighting for a 10-year contract that would spell out a minimum amount of gas for Gazprom to pump every year. Ukraine gets about $3 billion a year in transit fees from Gazprom, and it would develop a major hole in its budget without the funds.Russia agreed to a five-year deal with a minimum of 65 billion cubic meters to be supplied in 2020 (slightly less than this year’s projected imports) and 40 billion cubic meters in the following years. Both sides compromised on outstanding litigation that arose from the two countries’ previous tumultuous relationship as partners in the natural gas business. Gazprom agreed to pay Naftogaz the $3 billion it had won in an arbitration case, and Naftogaz agreed to drop lawsuits seek an additional $8 billion and to refrain from filing any others.Other compromises may have been reached, too. It’s been reported in Ukraine that Russia might resume direct supplies of gas for Ukraine’s own needs — something unthinkable under former Ukrainian President Petro Poroshenko’s government, when Ukraine was buying Russian gas in the EU rather than deal with the invader of Crimea. Russia is denying that direct supplies are part of the deal, but current Ukiraine president, Volodymyr Zelenskiy, is more pragmatic than Poroshenko was and eager to end the armed conflict Russia has instigated in Ukraine’s eastern regions. The new gas deal, described by the EU official who brokered it as a win-win solution for both sides, shows that Putin, with his transactional approach to foreign policy, values Zelenskiy’s willingness to bargain and compromise. As a result, Ukraine will remain an important pillar of the new Russian gas export scheme at least for the next five years. Though Putin didn’t originally want that, making every effort to establish gas supply channels that go around it, Russia’s resulting export system is remarkably balanced. It links Russia to China, Turkey, southern, northern and eastern Europe. All these markets are competitive, especially in Europe, where the EU has cracked down on Gazprom’s earlier attempts at monopoly pricing.Putin may have made and changed his plans for export channels in hopes of geopolitical leverage. This — and the big infrastructure contracts for Kremlin cronies that came with the pipeline buildout — helped justify the tens of billions of dollars invested in the pipeline and LNG projects. Gazprom’s capital expenditure has averaged $6.4 billion per quarter in the last five years, some 23% of the average quarterly revenue over the same period. The company has remained profitable throughout, but it has more than doubled its debt load since 2013, while revenue has increased by a projected 40% this year compared with 2014.Now that the infrastructure mostly is in place and the deposits needed to feed it are either online or coming online in the near future, the marginal cost of exporting gas will be relatively low, and Russia is guaranteed a solid export revenue stream in a fast-changing global gas market. That’s important for a country that exported $49.1 billion worth of natural gas in 2018 and collected some 7% of its budget revenues from the gas industry. Russia's export partners, of course, eventually move to phase out fossil fuels. That, however, won’t be happening anytime soon, as both Europe and China will need more gas as they replace coal. Russia is projected to account for around a third of the EU’s gas supply at least until 2040. Putin will be gone by then, but Russia’s energy trade will be more diversified than when he came to power. More benign Russian governments will be able to use it as a basis for good neighborly relations rather than as an instrument of pressure. The results of Putin’s grand project show how multiple players — Putin the ambitious authoritarian, his situational allies such as Erdogan and Xi, his adversaries such as the U.S., his reluctant partners such as the EU and his victims such as Ukraine — can combine efforts to build something worthwhile. To contact the author of this story: Leonid Bershidsky at firstname.lastname@example.orgTo contact the editor responsible for this story: Robert Burgess at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
LONDON/MOSCOW (Reuters) - Incoming Chief Executive Bernard Looney will not take up either of BP's seats on the board of Rosneft when he takes over in February because of the complexity of the relationship with the Russian oil giant, five company sources said. Under an arrangement between Looney and outgoing Chief Executive Bob Dudley, Dudley will keep one of the seats when he retires in March, the sources said. Guillermo Quintero, a Venezuelan national who is also a former BP executive and has ties to the South American country's national oil company PDVSA, will keep the other seat, they said.
TOKYO/MOSCOW (Reuters) - Rosneft CEO Igor Sechin is seeking investment in the company's $157 billion Vostok oil project in the Russian Arctic from Japanese trading houses and oil companies, three sources told Reuters. Vostok Oil is a newly established company that was formed to unite Rosneft's projects in northern Russia, including the Lodochnoye, Tagulskoye and Suzunskoye oilfields, and other projects, including the Ermak Neftegaz venture with BP. Crude oil is expected to be shipped to Asia via the North Sea Route (NSR).
Venezuela's state-run PDVSA and its joint ventures exported over 1 million barrels per day (bpd) of crude and fuel last month, rebounding from October due to larger sales to India, according to internal company reports and Refinitiv Eikon data. The company sent a total of 37 cargoes containing 1.037 million bpd in November, a 25% increase from October, and the third highest monthly figure since the U.S. government in January imposed tough sanctions on PDVSA. Petróleos de Venezuela, S.A., known as PDVSA, did not respond to a request for comment on Monday.
(Bloomberg Opinion) -- Twelve of the 658 pages in the just-published Saudi Aramco prospectus list the banks, law firms and consultancies midwifing this gargantuan IPO. Much further back, you will find the third-party certification of the company’s oil and gas reserves. Including the cover letter and two sets of signatures, this clocks in at 10 pages.If that strikes you as a tad unbalanced, consider the IPO of another state-owned energy behemoth, Rosneft Oil Co. PJSC, the Russian oil champion. The third-party assessment of its oil and gas reserves published in its 2006 prospectus runs to 135 pages, incorporating detailed field-by-field analysis of reserves, pricing and different scenarios. To be fair, Saudi Arabian Oil Co. has another 16 pages of more qualitative material on its upstream operations under the business-description section; on the other hand, that bit ran to more than 50 pages for Rosneft. True, Rosneft’s upstream business was a somewhat complicated affair given its then-recent, er, bargain acquisition of what had been Yukos. Still, it just isn’t a good look that, despite seeking a valuation 15 times Rosneft’s current enterprise value, Aramco has chosen to publish an upstream assessment that looks like a pamphlet in comparison.Sometimes, it’s the stuff that doesn’t make it onto the page that can end up defining a great work. Aramco’s refining and chemicals operations could also use more detail. The prospectus provides high-level, combined financial numbers for these businesses, as well as for their major joint ventures and associates. It also provides high-level data on overall production of refined products and chemicals, including throughput at major refineries. This is all good. But in terms of getting at the underlying economics of the businesses, especially margins, it leaves much to be desired — or, in modeling terms, assumed. Again, even Rosneft provided per-unit costs for its refining business, as well as realized pricing for products.Refining and chemicals amounted to less than 2% of Aramco’s operating income last year, so it could be argued what’s there in the pages is fine. But as Aramco’s own marketing tells us, expanding the downstream business is a priority — why else spend $69 billion for control of Saudi Basic Industries Corp.? Downstream operations are set to consume a quarter of the company’s $40 billion-plus annual capex budget.Similarly, 40% of that budget is allocated to developing Aramco’s natural gas operations. Again, however, there is little disclosure about the economics of this business, apart from a summary of the resources, some price assumptions in the third-party upstream assessment and a qualitative description of the mechanism whereby Aramco gets compensated by the government for selling domestic gas at below-market rates.Altogether, therefore, roughly two-thirds of Aramco’s capex is earmarked for developing businesses that are likely to suppress its return on capital relative to upstream operations, at least in the near term. Even if these businesses are relatively small for now, helping investors get a more detailed understanding of what sort of profits (or losses) they have generated seems like a small ask.I would say that, of course, but then Aramco isn’t selling stock to me. The point is that the best outcome from this IPO for both the company and its state owner would be eager participation by global money managers. Aramco has shied away from an international listing; Rosneft’s more detailed disclosure reflects its choice of London. Persuading rich Saudi Arabians to chip in may help with the day-one headlines, but the economic effect is more akin to domestic taxation than injecting foreign capital.Greater transparency could help with the latter; and, who knows, maybe it will be offered in the safer spaces of the road show. A one-dollar move in assumed refining margins shifts Aramco’s valuation by less than $24 billion, or 2%, according to my calculations. But a move of just half a percentage point in the discount rate (read: expected dividend yield) adds up to more than $130 billion. That seems worth giving away a little more.To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Russia’s largest oil company has already completed the switch away from the U.S. dollar in an effort to minimize its exposure to U.S. sanctions
VERONA/MOSCOW (Reuters) - Russia's largest oil company Rosneft has fully switched the currency of its contracts to euros from U.S. dollars in a move to shield its transactions from U.S. sanctions, its Chief Executive Igor Sechin said on Thursday. Rosneft's switch to the euro is seen as part of Russia's wider-scale drive to reduce dependence on the dollar, but it is unlikely to quickly boost the euro's role for Russia given the negative interest rates it carries.
NEW DELHI/MEXICO CITY (Reuters) - India's Nayara Energy has been using Russian giant Rosneft as an intermediary to acquire Venezuelan oil, paying it in fuel rather than cash to avoid violating U.S. sanctions, three sources with knowledge of the transactions said. The United States in January prohibited U.S.-dollar transactions for oil sales from Venezuela's PDVSA or its units, a measure intended to cut off cash flows and increase pressure on President Nicolas Maduro, whose 2018 re-election has been dismissed as a sham by Washington. The sanctions have made some banks wary of processing any transaction for Venezuelan oil, even if the seller is not the state-run company.
Venezuela's oil exports ticked up in September from the previous month, but not enough to reduce high inventories that have forced the country to pare its output, according to Refinitiv Eikon and PDVSA internal data. Fewer buyers have been taking Venezuelan crude amid U.S. efforts to oust socialist President Nicolas Maduro. In August, the United States expanded its efforts to punish non-U.S. firms "materially assisting" Maduro.